Franklin Financial Services Corporation · NASDAQ:FRAF
Franklin Financial Services — Q3 2023 Earnings Presentation
34 slides from Franklin Financial Services's earnings presentation, Nov 17, 2023
Slide 1: Third Quarter 2023 Highlights
Investor Presentation Third Quarter 2023 Highlights F&M TRUST Franklin Financial Services Corporation
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements appearing herein which are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements refer to a future period or periods, reflecting management’s cu
Slide 3: CEO Comments
CEO Comments By many measures, 2023 has been a very challenging year for the banking industry. Issues of quickly rising interest rates, contracting NIM, tight liquidity, and the fear of looming credit-quality issues are enough to create concern for the industry. Yet, amidst the problems is opportuni
Slide 4: CEO Comments
CEO Comments As we discussed at the end of the second quarter, FFSC is focused on the future. As we continue to grow our digital and AI capabilities, we are building in operating efficiencies and management tools that will improve the profitability of the company. All this is possible because of the
Slide 5: Mission, Vision & Core Values
Mission, Vision & Core Values Mission Statement Delivering the right financial solutions from people you know and trust. Vision We are committed to remaining independent by growing our bank to meet the increasing needs of our employees, customers, communities, and shareholders. We strive to be a fin
Slide 6: Overview of Franklin Financial
Overview of Franklin Financial Franklin Financial, which was formed in 1983, is a holding company headquartered in Franklin County, PA Franklin Financial’s wholly-owned subsidiary, F&M Trust, was founded in Chambersburg, PA in 1906 Total assets of the Company were $1.83 billion as of September 30, 2
Slide 7: A Market Share Leader
A Market Share Leader 22 locations in Franklin, Cumberland, Fulton, and Huntingdon counties PA, and Washington County MD #1 Deposit Market Share in Chambersburg (49.7%) #1 Deposit Market Share in Franklin County (37.6%) #2 Deposit Market Share in Fulton County (34.2%) Began operation in MD in June 2
Slide 8: Experienced and Cohesive Executive Team
Experienced and Cohesive Executive Team Executive Title Years of Banking Experience Joined F&M Trust Prior Experience Timothy G. Henry President & Chief Executive Officer 41 2016 Fulton, Centra Bank, BlueRidge Bank, Susquehanna Bank, BB&T Mark R. Hollar Executive Vice President, Chief Financial Offi
Slide 9: Experienced and Cohesive Executive Team
Experienced and Cohesive Executive Team Executive Title Years of Banking Experience Joined F&M Trust Prior Experience Louis J. Giustini Senior Vice President, Chief Retail Services Officer 35 2022 Hagerstown Trust, Columbia Bank, Fulton Bank Karen K. Carmack, DM Senior Vice President, Chief Human Re
Slide 10: Positioned for Growth and Profitability
Positioned for Growth and Profitability Market share leader in core deposit, loan, and asset-management segments in economically stable and historically growing markets Recently-hired executive team members bring extensive banking industry experience and market knowledge, adding to an already experi
Slide 11: Third Quarter 2023 Financial Updates
Third Quarter 2023 Financial Updates Loan portfolio grew by 5.4%, primarily in Commercial Services division Net interest income for the third quarter of 2023 was $13.7 million compared to $13.2 million for the second quarter of 2023 Deposits increased 3.6% from the second quarter of 2023 Loan-to-dep
Slide 12: Third Quarter 2023 Financial Updates
Third Quarter 2023 Financial Updates Fee income from new mortgages originated for sale in the secondary market was down $150 thousand from the second quarter of 2023 as production slowed due to higher interest rates Allowance for credit loss ratio of 1.29%; non-performing asset ratio of 0.01% Capita
Slide 13: Data-Driven Performance
Data-Driven Performance To support the bank’s growth, a Data & Performance Analytics department that includes Manager, Salesforce Administrator, Salesforce Developer, and Business Performance Analyst was created Performance reporting and data analytics will support key business decisions, improve pr
Slide 14: Outlook for the Remainder of 2023
Outlook for the Remainder of 2023 The Company will continue building for the future by leveraging our investments in our physical, technological, and sales infrastructure including: Further integration of Salesforce into sales, operations, and marketing Expanding our presence in the Pennsylvania and
Slide 15: Outlook for the Remainder of 2023
Outlook for the Remainder of 2023 Deposit balances will moderate due to the tension between rising rates and the bank’s efforts to control interest costs and manage liquidity needs Market pressure on deposit rates and competition for high-quality lending relationships may have an adverse effect on N
Slide 16: Summary
Summary The Company continues to be well capitalized and positioned to successfully develop new Commercial and Investment & Trust relationships The bank is positioned to fund future growth Asset quality is good, and the Company is well provisioned for losses should they occur in future quarters due
Slide 17: Financial Updates Third Quarter Ended September 30, 2023
Financial Updates Third Quarter Ended September 30, 2023 F&M TRUST Franklin Financial Services Corporation 17
Slide 18: Balance Sheet Highlights
Balance Sheet Highlights Dollars in Thousands (000’s) 9/30/2023 6/30/2023 12/31/2022 9/30/2022 Total Assets $1,827,910 $1,736,165 $1,699,579 $1,847,162 Cash and Cash Equiv. $73,953 $64,832 $64,899 $210,156 Investments $458,662 $439,851 $487,247 $492,467 Net Loans $1,191,322 $1,130,547 $1,036,866 $1,
Slide 19: Income Statement Highlights
Income Statement Highlights Dollars in Thousands (000’s) Quarter Ended 9/30/2023 Quarter Ended 6/30/2023 Quarter Ended 9/30/2022 Interest Income $20,154 $18,511 $15,043 Interest Expense $6,447 $5,316 $980 Net Interest Income $13,707 $13,195 $14,063 Provision for Credit Losses $866 $524 -- Noninteres
Slide 20: Key Performance Measures
Key Performance Measures Percent (%) Quarter Ended 9/30/2023 Quarter Ended 6/30/2023 Quarter Ended 9/30/2022 Return on Avg. Assets 0.86 0.70 1.00 Return on Avg. Equity 12.73 9.82 14.86 Efficiency Ratio1 67.86 72.17 67.23 Net Interest Margin 3.29 3.30 3.28 Noninterest Inc2 / Operating Revenue 22.62 2
Slide 21: Balance Sheet Strength
Balance Sheet Strength Percent (%) Quarter Ended 9/30/2023 Quarter Ended 6/30/2023 Quarter Ended 9/30/2022 Risk-Based Capital Ratio (Total) 15.13 6.57 17.34 Leverage Ratio (Tier 1) 9.10 9.39 8.59 Common Equity Ratio (Tier 1) 13.03 13.88 14.29 Tangible Common Equity Ratio 5.81 6.41 5.39 Nonperforming
Slide 22: Market Statistics
Market Statistics Per Share Measure / Market Valuation Quarter Ended 9/30/2023 Quarter Ended 6/30/2023 Quarter Ended 9/30/2022 Diluted Earnings Per Share $0.88 $0.68 $1.05 Cash Dividend Yield 4.49% 4.61% 4.06% Regular Cash Dividends Paid $0.32 $0.32 $0.32 Dividend Payout Ratio 36.07% 47.08% 30.36% M
Slide 23: Balanced Revenue Model
Balanced Revenue Model Annualized Noninterest Income Source as a percentage of Average Assets as of September 30, 2023 2023 Franklin Financial Median PA Banks Peer1 Trust 0.41% 0.03% Service Charges on Deposits 0.14% 0.09% Gain on Sale of Loans 0.01% 0.01% Other 0.26% 0.25% Total Noninterest Income2
Slide 24: Deposit Mix as of September 30, 2023
Deposit Mix as of September 30, 2023 Cost of Deposits (%) 0.28 0.12 0.23 1.14 Franklin Financial Deposit Mix ($000’s) Retail Time $110,306 7% Demand Deposits $295,181 19% Interest- Bearing Checking $465,897 30% MMDAs & Savings $696,030 44% F&M TRUST Franklin Financial Services Corporation 24
Slide 25: Deposits by Category
Deposits by Category Deposits by Category ($000’s) $59,858 $57,390 $89,742 $110,306 $592,636 $496,533 $445,003 $465,897 $734,771 $698,294 $691,005 $696,030 7.7% 8.5% 8.7% 9.4% $317,719 $299,231 $287,385 $295,181 Demand Deposit MMA & Savings Interest Bearing Checking Time Total Uninsured / Uncollater
Slide 26: Diversified Loan Portfolio
Diversified Loan Portfolio Loans Outstanding1 ($000’s) $52,290 $41,140 $41,846 $37,486 $35,292 $105,639 $111,232 $113,629 $140,637 $145,279 $150,232 $118,443 $118,969 $212,030 $208,615 $218,468 $259,849 $73,049 4.05% $74,407 3.86% $106,921 4.14% $121,012 5.08% $389,723 68706 $406,956 77533 $456,198
Slide 27: Largest Commercial Real Estate Concentrations
Largest Commercial Real Estate Concentrations CRE Concentrations ($000’s) $31,357 $31,259 $33,410 $46,355 $60,343 $49,160 $43,812 $54,631 $35,556 $30,938 $55,428 $69,301 $54,153 $50,105 $58,382 $82,892 $72,079 $112,158 $75,839 $81,283 $81,565 $24,459 $69,723 $96,515 $72,079 $112,158 Apartment Units
Slide 28: Strong Credit Quality
Strong Credit Quality Nonperforming Assets1 / Assets (%) 0.30% 0.01% 0.01% 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% 9/30/2022 12/31/2022 6/30/2023 9/30/2023 0.01%1Nonperforming assets = nonaccrual loans, loans 90 days past due and other real estate owned F&M TRUST Franklin Financial Services
Slide 29: Liquidity Available at September 30, 2023
Liquidity Available at September 30, 2023 Dollars in Thousands (000’s) Liquidity Source Capacity Outstanding Available Federal Home Loan Bank $451,460 $40,000 $411,460 Federal Reserve Bank Discount Window $55,126 $ – $55,126 Federal Reserve Bank Term Funding Program $86,765 $70,000 $16,765 Correspon
Slide 30: Investment Portfolio
Investment Portfolio 29 $12,574 $84,286 $90,257 $71,141 $247,054 $212,227 $155,455 $128,717 $20,288 $24,939 $24,239 $22,983 $108,571 $177,685 $150,935 $134,370 $8,453 $30,674 $65,950 $101,065 $12,571 $4,094 $(61,497) $(67,252) -$80,000 -$70,000 -$60,000 -$50,000 -$40,000 -$30,000 -$20,000 -$10,000 $
Slide 31: Investment and Trust Services
Investment and Trust Services Total and New Assets Under Management ($000’s) $1,200,00 30 $124,483 $127,807 $126,394 $942,476 $977,471 $963,828 $1,066,958 $1,105,279 $1,090,222 $41,002 $82,167 $123,055 $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 Brokerage Trust Total New Assets Under Managemen
Slide 32: Stock Symbol: FRAF (Nasdaq)
Stock Symbol: FRAF (Nasdaq) www.franklinfin.com www.fmtrust.bank F&M TRUST Franklin Financial Services Corporation 32
Slide 33: Appendix
Appendix F&M TRUST Franklin Financial Services Corporation 33
Slide 34: GAAP / Non-GAAP Reconciliation
GAAP / Non-GAAP Reconciliation Tangible Book Value (per share) (non-GAAP) Quarter Ended 9/30/2023 Quarter Ended 6/30/2023 Quarter Ended 9/30/2022 Shareholders’ equity $114,769 $119,770 $108,151 Less intangible assets (9,016) (9,016) (9,016) Shareholders’ equity (non-GAAP) 105,753 110,754 99,135 Shar
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